EURGBP Inches Higher After Inflation and Vaccine Threat

The EURGBP exchange rate was 0.13% higher on Wednesday morning as the single currency attempts to recover ground from sterling’s strong start to 2021. Inflation data from the UK showed a large miss on forecasts after retailers slashed prices. This morning also sees PMI data from Germany, Europe and the UK.

EURGBP trades at 0.8625 as the pair seeks a third day of gains but the pair has erased earlier euro gains after the release of data.

PMI Data Will Guide Rates After Inflation Miss

The Eur v GBP rate is now looking to the latest Purchasing Manager’s Index data from German, the Eurozone and the UK this morning. The German manufacturing sector has been strong despite the lockdowns and is expected to show a reading above 60 once more.

The Eurozone and UK both beat expectations this morning with a 56 reading for the Euro composite number beating the 51 expected. The UK actually saw a strong number for its services sector at 56.8 versus hopes for a 51 reading.

The numbers helped to erase euro gains after UK inflation was a dud at growth of 0.4% compared to analyst expectations for 0.8%.

British prices slumped after retailers cut the cost of clothing and footwear in an attempt to shift stock. The retail sector is also seeing some if its stores closing down because of the lockdowns and this is causing further cuts in pricing.

Merkel Rules Out Blanket Vaccine Ban

German Chancellor Angela Merkel has warned the UK that shipments from a Dutch AstraZeneca plant to the UK will continue to be guarded by the EU, although the Chancellor ruled out a blanket ban on vaccine exports to the UK. Sterling’s value was losing ground after the EU vaccine threats, which came as Europe’s largest economy was set to impose a complete shutdown over the Easter holidays.

The British Prime Minister has said this morning that the country would stick to his roadmap for reopening “step by step, jab by jab” with the country saying that 28 million people have now been vaccinated. A further reopening is set for April and despite the vaccine hiccup, the UK should be well ahead of the European reopening, which will play into the future pricing of the euro to pound exchange rate.

The EURGBP found support near the 0.8550 level in the last week and is attempting to make a path to the 0.8700 level. Get in touch to disuss these factors in fruther detail and be kept up to date with the latest market movements.

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